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Monitoring Your Money Isn’t The Same As Budgeting Your Money
Posted By Ron On February 11, 2010 @ 6:30 AM In Budgets,Personal Finance | Comments Disabled
About 3 years before we were married, my wife and I attended a Christmas break college youth group seminar in Gatlinburg with our church. We decided to pool our poverty money and track it. I can’t remember how much each of us contributed to the pool, but it wasn’t much! As I recall, we only had about $80 and it had to last about 4 days for both of us. We faithfully tracked every cent and at the end of the seminar, we were missing 9 cents. We thought we were on top of it, even though we spent everything we had!
A week or so later, we were exchanging gifts  with her side of the family and I mentioned to my future brother-in-law that our budget  was only off by 9 cents (did I mention that he was a CPA?). His response nailed me right between the eyes:
You can account for virtually all your money, but did that exercise help you spend LESS? Knowing where it went is worthless unless it helps you make better decisions.
When you set up your personalized spending plan through YNAB , you’re able to not only monitor your money, you’re able to give every single cent a specific job. You give a purpose to every single dollar. Most other budget  systems, even the very good ones, only monitor where you spent last month’s dollars. In essence, you’re constantly looking backward at what happened rather than making plans for what you want to happen. That isn’t real budgeting.
When you set up a real budget , you’re able to align your money with what’s important to you. For example:
By using budgeting  software such as You Need A Budget  instead of financial monitoring software like Quicken, you’ll be more aware and more purposeful with your money. Remember: knowing where it went is worthless. Using that information to help you spend less in the future is what’s important. When you give your money a job, that’s exactly what you’re doing, and it’s one of the basic rules of using YNAB .
My wife and I did a great job of tracking our cash. We didn’t spend less, but just spent until we ran out of cash! We did a horrible job of giving our money purpose – deciding what was important, whether it was dining out, skiing, ice skating, buying souvenirs, or putting aside a few bucks for our savings account.
Don’t make the same mistake we did! Give your money purpose, give it a job , and give a few of those dollars a long term career!
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